In the long run, current output will:
A) equal potential output.
B) be less than potential output.
C) be above potential output.
D) only equal potential output if unemployment is zero.

Question

Quizplus · Accepted Answer

In the long run, current output will eventually equal potential output as the economy adjusts and reaches full employment. This is known as the natural rate of output, where all available resources are being used efficiently. Therefore, option A is correct. Option D is incorrect as there can still be some unemployment even when the economy is at full employment, such as frictional and structural unemployment.

In the Long Run, Current Output Will